Supply Chain Blog

FMCG Supply Chains - For Whom the Bell Tolls in Romania?

Posted by Stefan Cucu on Thu, Oct 30, 2014

We hadn’t seen R. in the last three years.  Now this happened in the middle of the street and after the kisses and hugs, the usual ‘how do you do’ followed. People were pushing us angrily, a clear sign that we had to continue this conversation elsewhere, in a quiet place. And so we did. R. visited us the next day to give us the big news.

“I have decided to move in France!” The was not a big surprise as most Romanians learn from  childhood that one of the best things that can happen to them is the opportunity to leave the country. For some reason, I didn’t imagine R. was part of that category. That's because R. had a solid, local family business. Also, she was  living in a beautiful house, a true architectural masterpiece and her family’s heritage, full of valuable art.

On top of that, the house was located in a quiet area, but just few metres away from the city, near the old church – which was itself a beautiful piece of national patrimony.  Clearly, moving was not an easy decision.  “Well, the church is the problem. In fact, we have a new priest. And this new priest installed a new bell which is more powerful than the old one. There was no authorisation for this new bell and it is just a few meters from my bedroom. Every morning I wake up I feel electrocuted! I cannot stand it!”

Supply chain romanian companies resized 600“Well, did you complain or try to talk to the priest?” Do you think only once? He said he will never talk to a woman. I measured the level of noise pollution with the local H&S officials four times. The result was 120 dB compared with the limit of 50 dB allowed in residential areas. Eventually, I had to sue him. So we went to court but do you want to hear the final decision? The bell is OK. That's because for centuries, the Romanian people used the bells to signal the approach of invaders. This bell is needed in case of an air attack so does not need the neighbours’ permission, nobody needs to agree on the construction plans and everything is fine. This is the Municipality and the court’s final decision!”

I know, this story is absurd. It has a lot of local charm, has a bitter taste at the end but unfortunately it is very true. So what does it have in common with Supply Chain principles? My friend R. hit the nail on the head by saying: “I want to be treated like a client, their (local authorities) client, who pays the taxes and receives a good product in return. I want to witness the respect for the law, the respect that I’m a woman, the respect that I’m a citizen”.

Well, from a Supply Chain perspective, R. was clearly the client but the bureaucrats did not understand that and this is indeed a problem.

To know very well who your clients are and give them what they want - this is a basic Supply Chain rule. And we miss that so much in Romania, in the entire society. If you don’t believe that, just turn on the TV, ride a taxi or listen to the politicians.

Do you believe we can introduce Supply Chain educational programs in primary school? Yes, I know the answer. It was just a joke J! But what about educating the Romanian companies in the value of Supply Chain departments and Customer Service? Maybe it is not too late.

Image courtesy of taoti at freedigitalphotos.net

 

 

Tags: Customer service, FMCG, Humour, Stefan Cucu, Supply Chain

Supply Chain : When a bicycle is better than a Mercedes.

Posted by Stefan Cucu on Tue, Oct 07, 2014

The summer of 2004. It was 3 weeks after I had changed the job and the company. It was  a new (Supply Chain) position in an FMCG company with many people speaking native French. At that time, the mayor of Bucharest- the future Romanian president established almost overnight what the companies called at the time "blockade of Bucharest”. All trucks over 5 tonnes were not allowed to enter into Bucharest during day light.

Do you remember the time? Food spoiled on the ring road because drivers had consumed their diesel, stocks blocking the warehouses and sales plummeted dramatically. For a few weeks it was a total mess. After a while things calmed down and zones A, B, C were created in Bucharest each with appropriate entry fees. Something which Paris, Vienna, London had taken a few years to set up we made in Bucharest in a few weeks. Our style, obviously.

At the beginning things got out of control and no one knew what to do.  In Romania, politicians “defended the people from the noise and pollution made ​​by multinational companies” (I quote from the mayor’s answer to my humble attempt to make known the situation). Eventually they realised that people became nervous and probably hungry if they do not find milk and bread at the corner store.

“Why the Logistics and Sales people cannot collaborate?” - Asked my GM in a board meeting in which I was replacing my boss.  "Do not bother me unless the warehouse is on fire” said my French boss before taking his annual leave. And because the warehouse did not catch fire, on the contrary, it was blocked with merchandise up to the ceiling, I had to answer something to my GM. Well,  I tried to say something about the SCOR principles, about how bad integrated were the departments and a possible internal SLA -  but people looked angrily at me as obviously I was wasting their time.supply chain sales warehouse stock distribution mercedes

The GM saved me then, God bless him, he translated my complicated supply chain jargon into something very simple: I can understand that , Ahaa- to  organise a meeting between sales and logistics. Let`s call it VELO  (from the french Ventes et Logistique)! "

Yes, this is how VELO was born. The first version of an SLA between Sales and Logistics. The document:  one page off 2 reciprocally asked  indicators, 5 by Sales and 5 by Logistics. From what I know, it still operates successfully in that company. The power of VELO is huge. Often, a VELO is worth more than S&OP, it was proven to me on many occasions. When that happens? Usually, when S&OP is transformed into a long line of endless discussions without targets other than getting signatures on useless piece of paper. Or simply when S&OP is not known, you are under pressure and have to do something for your organisation.

A Supply Chain is strong as long as it is integrated. The problem with that is this integration is not simply possible to be achieved overnight. The vast majority of companies in Romania that I know have made real progress in integration with suppliers and customers, but still neglect internal integration. This is another important reason why S&OP fails:  lack of supervision from the GM as the power of dissolution coming from various the departments is huge. It is the famous "silo mentality" that manages to impose its strength. "I'm right" is the priority instead of profit and turnover.

S&OP, with all its simplicity, is also expensive. Obviously it can be very efficient, as efficient as a Mercedes engine: purring smoothly while the vehicle takes you to your destination, and your indicators panel (KPI`s obviously) keeps you in control.  

Just remember, on bad Romanian roads, sometimes it is simply not worth it to drive a Mercedes!  If your company departments struggle bitterly between each other, you are driving on a damaged road (the dimension of the hole is proportional to the long e-mails’ which people exchange in your organisation when blaming each other)...

Then it's time to think a bicycle (VELO) can be more effective than a Mercedes!

C`est absolument normal!

Partial image courtesy of www.freedigitalphotos.net


Tags: FMCG, Route to Market, Stefan Cucu, Supply Chain, S&OP, Forecasting & Demand Planning, Logistics Management, Inventory Management & Stock Control

FMCG Supply Chain Insights - In trust we trust!

Posted by Stefan Cucu on Fri, Sep 05, 2014

No, I’m not suggesting we should start printing Supply Chain bank notes but if these were ever introduced, they would certainly need to contain the phrase above. Or just imagine introducing a new KPI: the trust level inside your Supply Chain, a (key) common indicator for all players: departments, suppliers and clients. This would not be so new: the stock markets are using it as we speak.

Seriously, some years ago, I was asked to define the most predominant feeling when working in Supply Chain. This happened during a training session in Leadership. Initially, I did not understand what they wanted from me and in addition, the question came from a former SAS trainer, with iron muscles and a metallic look. He told incredible stories and recommended us to sleep no more than 4 hours per day. ..... I was confused about this questions coming from Mr. Terminator.

After that incident, I kept searching for an answer for many years. Feelings? When you deal with numbers all day long? Yes, perhaps I should cry, particularly when the expenses are way above budget?  Anyway, it so happened that the answer should be given by a waiter.

If you are familiar with the city of Hamburg, you may have had the chance to eat at Friesenkeller, a local restaurant near Alster. Nothing sophisticated (at the time), just good food and good service.

I was a young Supply Chain Manager celebrating together with his team and the German suppliers of raw materials. What were we celebrating? A Service Level Agreement (SLA), finally signed after two years of struggle: articles, paragraphs, wrapped up in a document which weighed about two kilos and was most likely impossible to be read by any normal human being.

Supply_Chain_SLA_supplier_qualityCheering, smiling, laughing. We had finally done it! I had a plate of shrimps. Exceptionally cooked, with olive oil, rosemary and a vague scent of garlic... “You have some excellent shrimps in Germany. I guess you must have an SLA with your shrimp supplier”, I said jokingly. Everybody at the table enjoyed my joke, but not the waiter, who after placing the fork at the correct distance from the plate, said “I don’t know, sir, but I’ll ask”. The German colleagues tried to explain to the waiter what was an SLA.  Nevertheless, we did not expect the waiter to take the matter seriously.

But in the end, after we had finished the delicious meal, the waiter came with a most elaborate answer: “Our shrimps are not German, sir. They are French because our supplier is French. We did not change the supplier in the last 40 years because of the exceptional quality and freshness but we don`t have a SLA, we just trust them.”

Wow! Here is my answer: trust, we need trust in Supply Chain.  We speak about Supply Chain transparency, but you feel trust when you have it. All the magnificent apps you use to interface the ERP`s, capable to generate reports that others apps will read, all these are generating trust.

Yes, indeed, trust is expensive: 40 years of shrimp trade or lots of money in IT systems, SLAs, etc…

I know, you will say trust is needed in any job, and this is true, but in Supply Chain it is certainly a must-have.

Perhaps you should introduce this inside your Supply Chain: a new KPI - level of trust...  Just think about it.

Image courtesy of tor00722 at freedigitalphotos.net

Tags: Customer service, FMCG, Humour, Stefan Cucu, Supply Chain

Supply Chain Insight: FMCG Drinks Stock Shrinkage

Posted by Stefan Cucu on Wed, Aug 06, 2014

Today we see a lot of writing about Supply Chain. Technology is advancing rapidly and we are seeing changes almost on a daily basis; progress is simply enormous. However, some things never change and this is what I discuss here – things that never change.

I am not going to tell you about anything difficult. What I mentioned above is as old as humanity but all too often forgotten. True, such things are not usually directly addressed by our business as they relate to common sense only but as we know, common sense is not that common! Of course, I can only approach this from a personal perspective as everyone is entitled to their own opinion.

Today's Topic: "Yeah man, we steal here!"

This is without any doubt one of the most powerful insights that I have been offered in my Supply Chain consultant career. Once upon a time, when I accompanied a sales rep on his route in a Route-to-Market (RTM) project, I visited a certain street in the southern Romania district of Giurgiu. The day was beautiful, the sun was shining and spring had finally arrived. I do not remember how many stores we had already visited, it was a typically busy day in multi-distributor RTM project. Despite the technology progression I mentioned earlier we had printed forms to complete as PC Tablets were still too expensive. I felt that, apart from the spring-like weather, the day would turn outquite boring.

The sales agent was visibly annoyed by me, as I marked several x’s and far fewer stars on my printed forms. He was wondering, what on earth do keep scribbling there? Well, I said, I have to write down whether I find any products in the refrigerator that are from the competition or even a different sector. “Aha, let me take you somewhere that you will remember for your whole life”, he said. And he was correct, I still remember to this day.

FMCG STOCK SHRINKAGE THEFT resized 600We went to one of the HORECA outlets, essentially a pub which was very crowded and full of people, noise and smoke. The pub also had a cooler provided by the sales agents company. Do believe me, that refrigerator was the most beautiful thing I had seen throughout the project. It was flawless, arranged exactly as it needed to be, with the premium and expensive products nicely placed on the top shelf at eye level, the products which his company tried so hard to sell and promote. In the cooler there was no trace of competition; excellent, this was simply divine. I would have gladly taken a “selfie” with the cooler and post it on Facebook but I figured out a tiny problem - a huge padlock.

Nobody could use the cooler. Was it just for decoration? The agile waitress was very busy, serving the customers by bringing them their selected beverages from the back room. At first, she did not understand what the long-face guy wanted from her (it was I, obviously baffled), but then exclaimed, “Well, I tell you, I can’t even leave the cooler open for ten seconds, the customers will steal everything”. Right, so it is, confirmed the agent, these guys steal everything!

Then something incredible happened: the buzz in the room stopped, like in old films the piano stopped playing and everyone was looking at me. A customer from a neighbouring table wearing a nice sailor T-shirt, showed me his broken and blackened teeth in a large, no, huge smile and exclaimed “Yeah man, we steal here!” Then obviously, everyone started laughing. And they laughed…

Half joking? Half serious? This is a warning to those who operate in traditional trade HORECA outlets – your products are being stolen or at least permanently borrowed!

While these drinkers were every honest about their dishonesty it is likely this is happening along the Supply Chain. A Supply Chain Manager surely needs to know the technical stuff but they also have to have a nose to sniff out where shrinkage is occurring.

Whether you signed a contract that can bring you personal benefits, no matter how large these benefits are, whether you favour suppliers or clients for reasons known by you only, or whether the stocks simply disappear from the company's warehouse - this is still called theft and eventually someone has to pay for it. Moreover, as a Supply Chain Manager you should be the first to know that something is going wrong and certainly before the Controlling or Audit department and certainly before any external legal involvement.

ERP, WMS, TPS, or BI, APO, MRP and the rest are excellent systems and procedures but they all fail if the phrase applies which my good old sailor friend from Giurgiu enunciated so well: we steal here!

Sometimes it’s that simple why you are losing stock and suffering expensive stock counts!

Image courtesy of chanpipat at freedigitalphotos.net

Tags: Brewing & Beverages, FMCG, Route to Market, Stefan Cucu, Traditional Trade, RTM Assessment Tool, Inventory Management & Stock Control